I spent the past two days in Seattle, meeting with the chief innovation officers (CIOs) of a dozen major companies. The purpose of the meeting was to share and compare best practices about innovation. The activities and achievements of these companies were dazzling. The whole event reinforced a nagging reflection in my own mind regarding a challenge facing management education.
The organizers of the confab asked Mike Lenox, Jeanne Liedtka, and me to give a presentation regarding the leadership of innovation in disruptive environments. Our theme was to discuss how innovators respond to uncertainty. Plainly this is a moment of high uncertainty. Generally, economic crises are so damaging because we don’t anticipate them very well—if you could see them coming, you could prepare. Nassim Nicholas Taleb calls such events “black swans,” which are rare and extremely powerful. Humans routinely underestimate the possibility of black swans because they want to view the world as a structured and predictable place and rely excessively on the central tendency of history (small, known, probable events). The black swan events occur with some regularity and result in mass layoffs, bankruptcies, wealth losses, and cashiered CEOs. In this context, you would think that innovation would take its lumps too.
Not so. Companies tend not to cut spending on research and development (R&D) in disruptive times. But they do redirect the spending toward the “core” of their business, to enhance the value proposition to the customer. Deferred for more buoyant times are the risky game-changing R&D projects.
Black swans starkly separate the successful from the unsuccessful innovation leaders. Describing some of the findings from her new book, Jeanne Liedtka said that successful leaders embrace disruptive uncertainty, develop an empathic view of customers, place many small bets quickly, and manage risk through action. Innovation leaders who fail recoil from the heightened uncertainty, understand customers as data, manage risk through analysis, and tend to make a few big bets slowly.
The theme of disruptive uncertainty resonated with the CIOs. But I never had the sense that it is a showstopper for them. Mind you, these are highly successful executives who got to where they are by prevailing in good times and bad—they tended to fit Jeanne’s profile of successful leaders. But what made a large impression on me is the extent to which they deal with disruptive uncertainty through a reliance on collaboration: they find and use help very effectively.
This is old news. Successful inventors in history, such as Thomas Edison, were champions at collaboration with people of diverse expertise. In his book How Breakthroughs Happen, Andrew Hargadon wrote, “What set Edison’s laboratory apart was not the ability to shut itself off from the rest of the world, to create something, to think outside of the box. Exactly the opposite: it was the ability to connect that made the lab so innovative. If Edison ignored anything, it was the belief that innovation was about the solitary pursuit of invention. Edison was able to continuously innovate because he knew how to exploit the networked landscape of his time.” ((Hargadon, How Breakthroughs Happen, page 17.)) What really mattered was Edison’s network of invention. Hargadon argues that the most successful inventors are very good at technology brokering: borrowing here and there to create something new. Furthermore, good inventors recombine what they gather; as Hargadon says, “All innovations represent some break from the past…By the same token, all innovations are built from pieces of the past” ((Hargadon, page 32.))—very few are truly revolutionary, radical, or discontinuous. What matters is the inventor’s network of connectivity to the past, and to inventions in the present.
Collaboration builds the network of innovation. Much has been written about collaborative innovation within firms. What emerged in this conference was inventive collaboration of a higher order: collaboration among firms. Collaborative corporate innovation (producer with customer; producer with supplier; even producer with competitor) was the consistent theme among these CIOs. And I was also impressed that the CIOs were using this kind of collaboration to assist them in responding to the heightened uncertainty in the current environment. Much of the share-and-compare dealt with creating promoting, and accelerating collaboration. I heard enough success stories to persuade me that mastery of collaborative skills can put people and companies at the cutting edge of their fields.
Connect this with another dot: the rise of social media and social networking. (One of the CIOs asserted that social networking will have a larger impact than the invention of the personal computer!) The raging popularity of social networking among Gen Y bespeaks an extraordinary appetite for connectivity. Can this connectivity be channeled on behalf of constructive collaboration, the kind that drives innovation even in disruptive environments?
Management education needs to rise to this challenge. Much of the learning processes at B-schools consist of activities that are passive, solo, and detached (think: lecture). Darden has been consistently distinctive from the herd by virtue of its use of collaborative learning processes. We offer a great deal of team work, projects, simulations, and group analysis of business problems. Of course, this may seem like a harder way to learn—you have to broker and recombine ideas to really discover their utility. Based on what I heard over the past two days, I think Darden has taken the right approach and should do more. Eventually, our peer schools will follow. It is hard to argue against the experience of a dozen successful innovation leaders.